Think Rich Invest News What's news this year? New year's resolutions, same as always, property markets down yet still up, share markets up yet still down, the Aussie dollar falls but is still high, gold prices high even though fallen. Confused yet? You should be! It's probably cynical to say that market commentators deliberately keep investment news confusing. It's probably cynical to say that there is a "boys club", using jargon, so that the ordinary person never has a chance to compete with them and make great returns. It's probably cynical but it's possibly true as well.... The only thing that the average person can see for themselves, without relying on a news report, is that we have had a LOT of rain in recent weeks. If you have managed to get outside you would perhaps have noticed that the grass is a lot longer, the trees are a lot greener, and the smiles on the faces of the farmers are a lot bigger than they have been for around a decade... From the popular media: Property prices are "softening" but still staying higher than where they were two years ago. Sort of like "three steps forward, two steps back". In the market news: Aussie Dollar powers ahead then stalls: "The Aussie dollar fell 1.5% over the week against the greenback as a result of the decline in the price of gold. The dollar closed the week at 76.6 US cents, still more than 30% higher than its value one year ago. " (Note to self: if something goes up by 30% and then drops back by 1.5%, it is STILL up.) More market news: "The price of gold stepped back to US$407 per ounce, 4.2% lower than it started the week, and its lowest point in over three months. It remains, however, 42% higher than this time two years ago." (Second note to self: if something goes up by 42% and then drops by 4.2%, it is still up a long way.) Try going to Paritech.com and doing a chart of the stock "GOLD" You can see by looking at the 12 month graph of gold prices, that the little drop at the end would only have upset you if you had bought all your gold last week and then wanted to sell it today. If you had happened to have bought all your gold the week before, or a month before, or a year before, and wanted to sell it now, you would have made a profit. (Note to self: buy a good investment and keep it for a long time. Selling one week later may be bad. Listening to news that says "Gold drops 4.2% in a week" may be meaningless.) So what does this all have to do with the rainfall? Nothing. Graphs of things moving up and down are commonplace. Rain is a rarer occurrence in Australia. In my opinion (and this is only my opinion), this recent bout of rain is the only dramatically "new" new thing to have happened in quite a while. Many farms have been drought-declared for up to 12 years (most only up to 7 years or less) and now they are getting some water. Share markets and property markets move every day and every week no matter what, gold prices move and dollars rise and fall with interest rate rises and falls. Only the rain will have a dramatic impact on farmer happiness ("consumer confidence"), the cash-flow of the country ('opened chequebooks'), job creation and economic health. As water soaks and things grow, farmers will be able to produce more crops, grain and livestock. This will mean more jobs for the people who buy from the producer and sell to the retailer, more jobs for the people who sell equipment and supplies to the primary producers, better quality and lower priced produce on the retail supermarket shelves, increased savings by grocery consumers, and more jobs and more spending all around. Yes, the farmers are looking happier. And the people who buy from, or sell to, the farmers, are also looking happier. The flow-on effect should be wonderful for our country. But as with any change in the weather or change in the economy, there will be some big winners, some losers, and some who just break even. Your mission is to find who the big winners will be from recent rains, and get in while you can. Or just call me! See you next month Jeremy |
